New landlord advice

maybelandlord

I got great help on MSE a number of years ago about some financial problems so thought I'd ask for some input again - with a new user name as can't remember login!

My partner and I are considering purchasing a flat as a btl investment. We've identified a few areas near us where it looks like we can get 7.5 - 8% yield. We have rented property out before but not for a good few years, but hopefully we know most of the pitfalls. I have a few specific questions:

Deposit protection schemes - there are a lot about, is there a perceived 'best buy'?

Residential Landlords Association - is this worth joining? We may end up with 4 btls in a few years time and living overseas much of the year.

Tax - in the past our btl's were in individual names but this would be in joint. Income will be jointly taxable but not sure how we allocate costs, e.g.: RLA membership - if taken out of joint account, but membership in my name (with other half an associate member). Can that just be apportioned 50/50 for simplicity? Similarly any mileage costs will be accrued by me - can we just apportion or do we need to keep 2 sets of accounts?

Allowable costs - not purchase costs (though if being bought purely for business I think it should be allowable ). Gas Safety etc allowable. What about decorating costs? Is that allowable under 'repairs and maintenance' or not allowable under 'improvements'?

If a boiler breaks and we choose to replace rather than spend say £500 on repairs where would that sit? And if a boiler couldn't be repaired so had to be replaced do we need to get proof of that in case our affairs get examined?

Finally - does anyone have any experience of letting property whilst living overseas? I haven't heard good reports of letting agents and we are planning on letting this ourselves. Our tentative plan going forward is that we will let all 4 properties ourselves. We will pay someone we trust a 'retainer' and they will be the named person with a UK address on the rental agreements. He will deal with any small problems himself and arrange repairs when required but rent would still be paid to us and we would pay workmen. Does that sound workable (well, it sounds workable but is it?).

I know there are some tax rules around rental income when you live overseas but that can wait - not sure at the mo how much time we'd spend there and if we would class ourselves as residents.

Thanks.

anselld

maybelandlord wrote: »

Deposit protection schemes - there are a lot about, is there a perceived 'best buy'?

There are three and all much the same in terms of performance. DPS would be the choice if you don't want to be responsible for holding tenants money as it is a custodial scheme.

maybelandlord wrote: »

Residential Landlords Association - is this worth joining? We may end up with 4 btls in a few years time and living overseas much of the year.

Useful source of documentation and advice, probably worth the money.

maybelandlord wrote: »

Tax - in the past our btl's were in individual names but this would be in joint. Income will be jointly taxable but not sure how we allocate costs, e.g.: RLA membership - if taken out of joint account, but membership in my name (with other half an associate member). Can that just be apportioned 50/50 for simplicity? Similarly any mileage costs will be accrued by me - can we just apportion or do we need to keep 2 sets of accounts?

Split everything 50:50. It doesn't matter which account it is actually paid from.

maybelandlord wrote: »

Allowable costs - not purchase costs (though if being bought purely for business I think it should be allowable ). Gas Safety etc allowable. What about decorating costs? Is that allowable under 'repairs and maintenance' or not allowable under 'improvements'?

Decoration is classed as maintenance unless it is part of a larger improvement project.

maybelandlord wrote: »

If a boiler breaks and we choose to replace rather than spend say £500 on repairs where would that sit? And if a boiler couldn't be repaired so had to be replaced do we need to get proof of that in case our affairs get examined?

Like for like replacement is an allowable cost. Proof of state of repair not required.

maybelandlord wrote: »

Finally - does anyone have any experience of letting property whilst living overseas? I haven't heard good reports of letting agents and we are planning on letting this ourselves. Our tentative plan going forward is that we will let all 4 properties ourselves. We will pay someone we trust a 'retainer' and they will be the named person with a UK address on the rental agreements. He will deal with any small problems himself and arrange repairs when required but rent would still be paid to us and we would pay workmen. Does that sound workable (well, it sounds workable but is it?).

Depends who you choose and how well experienced they are. How will you manage them and monitor their performance? Remember they are only your agent, you remain legally responsible for a whole raft of important issues.

maybelandlord wrote: »

I know there are some tax rules around rental income when you live overseas but that can wait - not sure at the mo how much time we'd spend there and if we would class ourselves as residents.

No, it can't wait. You need to understand the HMRC non resident landlord scheme as it has important implications for the way you operate the tenancy from day 1.
http://www.hmrc.gov.uk/international/nr-landlords.htm

ValHaller

anselld wrote: »

(deposit scheme) There are three and all much the same in terms of performance. DPS would be the choice if you don't want to be responsible for holding tenants money as it is a custodial scheme.

Agree with this. As tenant, I would want my money in a custodial scheme. There are various scenarios with the other insurance schemes which can put the deposit unprotected and require a further premium to insure it.

maybelandlord

anselld wrote: »

No, it can't wait. You need to understand the HMRC non resident landlord scheme as it has important implications for the way you operate the tenancy from day 1.

Oh for goodness sake, how complicated is all that!!!!! Thanks for pointing it out - I would have been looking in detail before purchasing but as well to know now. So, what do they mean by absence of 6 months or more? We are planning on 3 months in the UK in summer, and a trip back in winter, so although we will never be away for more than 6 months at a time we will be away around 9 months in total.

Thanks for all the other info also. The person we are talking of using is a self employed property developer and agent - he does it for others we know of. We'd be looking to use him to make it easier for us to fulfil our obligations, I know it is our responsibility but having someone in the country will help us.

Will go ahead with other suggestions, thanks.

G_M

anselld wrote: »

There are three and all much the same in terms of performance.

No.

There are now 4 companies operating 5 schemes.

Deposits (Rules on deposit protection)

See also:

New Landlords (general information for new or prospective landlords)

anselld

maybelandlord wrote: »

So, what do they mean by absence of 6 months or more?

Not entirely sure, probably best to confirm with HMRC, but I took it to mean 6 months or more within the tax year in question, ie more time abroad than in UK.